What is the result of the selling and administrative expenses?
And cash disbursement?
Kimmel Gnomes Each large gnome requires an average of 4 pounds of clay. The Large Gnome Division buys clay for $0.90 per pound and they expect the price to remain constant throughout the year. They expect to have 70,000 pounds of clay on hand as of July 1, 2018, the beginning of the first quarter of the fiscal year. At the end of each of the first three quarters, the Large Gnome Division would like to have their direct materials inventory quantity to equal 35 percent of the amount required for the following quarter's planned production. On Jund 30, 2019, the end of the fiscal year, Large Gnome Division would like to have i10,000 pounds of elay on hand ThirdFourth Ending DM inventory as a % of the next quarter's Ending DM inventory in pounds? The Large G e Division buys its clay on account. It pays for 45% of its purchases of direct materials in 35% 35% 35% 110,000 the quarter in which they were purchased and 55% in the quarter after they were purchased. 4. Each large gnome requires 3.00 hours (180 minutes) of direct labor. Employees engaged in direct labor will id on the 15h and 30 of each month. paid an estimated $15.00 per labor hour. Wages and salaries Variable manufacturing overhead is estimated to be $11.00 per direct labor hour for the coming fiscal year. All variable manufacturing overhead expenses are paid for in the quarter incurred. Fixed manufacturing overhead is estimated to total $330,000 each quarter, with $190,000 out of the total amount of $330,000 representing depreciation on machinery, equipment and the factory. All other fixed manufacturing overhead expenses are paid in cash in the quarter they occur. The fixed manufacturing overhead rate will be computed by dividing the year's total fixed manufacturing overhead by the year's badgeted direct labor hours. Round the fixed overhead rate to the nearest penny Variable selling and administrative cexpenses are estimated to be $14.00 per gnome sold. Fixed selling and 7, administrative expenses are expected to total $90,000 each quarter, with $25,000 out of the total amount of $90,000 representing deprociation on the office space, furniture and equipment. Other than depreciation, all selling and administrative expenses are paid for in the quarter they occur. On June 30, 2019 the Large Gnome Division plans to buy new machinery and equipment for $1,900,000. The new machinery and equipment will be acquired at the very end of the year, so it will not be used in production and sales during the coming year and it will not be depreciated until the following year. The Large Gnome Division expectsto pay 15% down and finance the remaining 85% of the equipment cost with a loan. No interest payable will accrue on the equipment loan until after June 30, 2019, The Division must maintain a minimum cash balance of $60,000. Ifafter accounting for cash receipts and dividends) in the cash budget, the budgeted cash available cash falls below $60,000 the Division will need to borrow cash. They have arranged a line of credit with Liberty Bank, allowing it to borrow in S10.000 increments. Assume borrowing will take place at the beginning of any quarter in which the available cash would otherwise be below $60,000 so that at no time during the quarter will the cash balance fall below $60,000 (after payment of interest). If there is extra cash at the end of the quarter and there is borrowing outstanding, the division should pay down principal (also in increments of $10,000). Liberty Bank charges the Division interest at the rate of 1.0% per quarter, which must be paid at the end of each quarter As a fully owned subsidiary, the Large Gnome Division does not pay income taxes. All income taxes are 1, charged to Kimmel Gnomes, the parent company. Large Gnome Division will pay dividends of $25,000
